CN Commits To Divest Small Overlapping Portion Of Lines With KCS

(RTTNews) - Canadian National Railway Co. (CNI, CNR.TO) or CN and Kansas City Southern (KSU) or KCS jointly filed with the Surface Transportation Board or "STB" a renewed motion for approval of its voting trust that outlines the case for approval of the voting trust to advance the CN-KCS merger that will enhance competition, Canadian National Railway said in a statement.

As part of the application, CN commits to divesting KCS' 70-mile line between New Orleans and Baton Rouge, which is less than 0.7 percent of the about 27,000 route-miles the two companies operate. The commitment eliminates the sole area of overlap between the CN and KCS networks, thereby making the combination an end-to-end transaction.

Last week, Kansas City Southern terminated its merger agreement with Canadian Pacific Railway Limited (CP, CP.TO) and entered into a merger agreement with Canadian National Railway Co.

The move came after Kansas City Southern had determined that the acquisition proposal KCS received from Canadian National Railway Company on May 13, 2021 continues to constitute a "Company Superior Proposal" under KCS's pending merger agreement with Canadian Pacific Railway Limited or "CP".

As per the terms of the CN merger agreement, each share of KCS common stock will be exchanged for $200 in cash and 1.129 shares of CN common stock.

In connection with the termination of the CP merger agreement, KCS paid CP a breakup fee of $700 million, which will be reimbursed by CN. KCS will be obligated to refund the amount under certain limited circumstances, including if KCS terminates the CN merger agreement to accept a superior proposal.